• New company with separate access to the capital market and headquarters likely to be in Essen strengthens the Group as a whole

• In connection with a capital increase, some 10 percent of the new company's share capital will be offered to the public in late 2016

• No change to the asset base available to back liabilities; RWE will remain the majority shareholder over the long term; RWE will increase its financial flexibility for the nuclear phase-out

• Parent company to focus on conventional power generation and energy trading

• North Rhine-Westphalia strengthened as the centre of the German energy industry

• Transaction still subject to RWE AG’s Supervisory Board approval

RWE will transfer its renewables, grids and retail operations in Germany and abroad to a new subsidiary and list it on the stock market. In so doing, the company will create a platform for growth with its own access to the capital market. This will strengthen the viability of the Group as a whole. The new subsidiary will be listed on the stock market probably in late 2016. RWE intends to offer some 10 percent of the new company's share capital to the public in connection with a capital increase. At the same or later point in time additional stakes may be disposed. The proceeds will be used to finance further growth in markets with good future prospects. There will be no change to the asset base available to back liabilities. In relation to the nuclear phase out, the RWE Group will increase its financial flexibility to fund its provisions. RWE AG will remain the new company's majority shareholder over the long term and consolidate it fully. The parent company will focus on conventional power generation and energy trading.

The transaction is still subject to RWE AG's Supervisory Board approval.

"Our next logical step"

"The Group's restructuring is our response to the transformation of the European energy landscape," says Peter Terium, CEO of RWE AG. "We are creating two viable companies under one roof. The new subsidiary will have its own access to the capital market and improve our growth prospects. At the same time, we are convinced that conventional power generation will remain an irreplaceable partner for renewable energy for decades to come. Our conventional power stations are the backup for renewables."

Terium continues: "During the last three years, we have turned RWE into a financially more stable, more efficient and agile company, which has moved closer to its customers. Now we are taking the next logical step in our transformation process. By establishing the new company, we are creating one of Europe's leading innovative energy companies with substantial expertise in managing decentralised energy systems. Within the new structure, we will continue to bear our responsibility in the conventional energy landscape and satisfy the needs of tomorrow's energy world.”
"We will also continue to stand by our responsibilities with regards to nuclear energy. This will not be affected by the new structure. On the contrary, the shares of the new subsidiary will be an asset that will make it easier for us to fund provisions in the future if necessary, whatever the circumstances."

New company with three strong pillars

The new subsidiary will be an integrated energy group with three main pillars. The renewables division will have a portfolio with an electricity generation capacity of more than 3.5 gigawatts and a strong focus on wind power. In grids, the company will be one of the most efficient operators in Central Europe, with a modern, 550,000 kilometre-long distribution network. In the retail business, the new subsidiary will serve over 23 million customers in twelve European markets and rank among the pace-setters of innovative customer solutions. Based on the pro-forma figures for 2015, the new company would achieve external revenue of more than €40 billion and EBITDA of over €4 billion. The company would employ approximately 40,000 of the RWE Group's nearly 60,000 staff members.

Exporting know-how from the transformation of the energy System

The new company will probably be headquartered in Essen like RWE AG. RWE is thus reinforcing its long-term commitment to North Rhine-Westphalia, the centre of the German energy industry. Acting as a growth platform, the company will contribute to safeguarding jobs throughout the RWE Group and creating new jobs in Germany and abroad. The new subsidiary will leverage experience gained from the transformation of the energy system and export the acquired know-how to selected markets such as the MENA region (Middle East North Africa).

The backup for renewables

In the future, the parent company, RWE AG, will focus on conventional power generation and trading. In so doing, the company will make a substantial contribution to the security and flexibility of the entire energy market. Moreover, thanks to its power plant capacity, it will be key to the successful transformation of the energy system. In view of the persistent pressure on wholesale power prices, significant additional potential for savings has been identified in conventional power generation. The profitable trading of energy and commodities will also remain a core business, not least optimising the deployment of RWE's in-house power plant capacity. The new structure will enable RWE to even better fulfil financially its responsibilities regarding the nuclear phase-out.

IPO in late 2016

The new company will seek to conduct an initial public offering towards the end of next year. The proceeds from the capital increase will be used to finance growth. Investments will mainly focus on the major trends of the energy world, the growth of renewables as well as decentralisation and digitisation. The major emphasis will be on renewables. However, the continued expansion of the modern electricity distribution grid and the development of innovative offerings for customers will also be given high priority. Beyond the capital increase, a further placement of shares could be possible over time. However, RWE AG will remain the majority shareholder of the new company.

"The new company will be an attractive dividend stock and also reinforce RWE AG's financial strength," says Peter Terium. "The capital increase will boost our investment capacity. I am extremely confident that our clear focus on our future-oriented business fields and the additional investment capital will enable us to create added value for the Group as a whole. The IPO is therefore in the interest of all our stakeholders."
The subsidiary is expected to begin operating as an independent company in the course of 2016. The Group's restructuring will be carried out in close co-operation with employee representatives in line with our tried and tested social partnership.